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CPF Minimum Sum

Why Will The CPF Minimum Sum Keep Increasing – Financial Planning Point Of View

There was quite a bit of hu-has on my Facebook’s news feed with lots of unhappiness that the CPF’s Minimum Sum has increased from $123,000 to $131,000 and that many more people will not be able to take their hard-earned money out from their CPF accounts and these money will eventually be “taken away” from them

Be assured that the “taken away” part will not be the case as I have seen many of my clients who have reached their draw-down age, did not reach the Minimum Sum and are still able to take out their money.

I will not be dedicating this post to how you will be drawing your CPF money when you reach the draw-down age or explain what you need to do if you are unable to reach the Minimum Sum. But rather, I will explain the rationale behind the annual increment of the Minimum Sum from the Financial Planning Point of View.

Proper Planning For Retirement – The Concept Behind The Minimum Sum

If you are truly concerned about planning for your Retirement, a Financial Advisor would usually sit down with you and work out the numbers. For instance, to plan for your Retirement, you would need to know a few numbers like

  • How much you would like to have and to spend each month and in today’s dollar
  • How long you would like to have these sum of money
  • What is your feel for the average rate of inflation

An Example To Illustrate The Above

Read More »Why Will The CPF Minimum Sum Keep Increasing – Financial Planning Point Of View

Have You Started Your Retirement Planning?

Part of a Good Financial Planning is planning well and early for your retirement and a good rule of thumb of starting your retirement planning can be well around your mid 20s as you may have started working by then and have the means to start saving.

What To Note For Your Retirement Planning

And the things to note for your retirement planning would be basically

  • The retirement monthly income you would need for your daily expenses (without really working) and lifestyle
  • How long you plan for this retirement income to last

A general guideline to know how much you would need is to note down how much are your current expenses and once you have gotten this figure, do a rough estimation whether you would like to maintain this kind of lifestyle (you can choose to have an even better or just a simpler one – it’s your life, so your choice!)

Then the portion for the how long you plan for it to last would be a gut feel. An average person would wish to have a retirement income to last for 20 years starting from the average retirement age of 65.

Once you have your figures ready, head over to the CPF Board’s Retirement Savings Interactive Calculator to get a rough feel how much you need to start saving now to hit your desired retirement income.

A sample of my Retirement Planning would be like below:

My Retirement Planning

Hmmm… and seems like I do have to start saving like $600 per month for the next 37 years in order to achieve my desired monthly retirement income of $2000.

Read More »Have You Started Your Retirement Planning?